China’s LNG producers in Sichuan cut prices on weak demand

06 August 2013 08:24[Source: ICIS news]

SINGAPORE (ICIS)--Three major liquefied natural gas (LNG) producers in Sichuan province, southwest China, have reduced their prices by yuan (CNY) 200-550/tonne ($32.6-89.8/tonne) since the beginning of August in view of weak downstream demand, sources said on Tuesday.

Dazhou Huixin Energy reduced the list price for August by CNY300/tonne to CNY5,600/tonne ex-works (EXW) for LNG produced at its 1m cubic metre (mcm)/day liquefaction plant at Dazhou in Sichuan.

End-users now have high levels of inventories, which were mostly purchased from northern regions during July when LNG supply was tight in Sichuan, said a major LNG producer in the province.

Meanwhile, downstream consumers are resisting higher offers.

LNG prices rose to CNY5,500-5,600/tonne in late July, which is equal to the price level during the winter consumption peak, because of supply shortfall and China’s implementation to reform the gas pricing mechanism nationwide on 10 July, the source said.

Consumers are expecting prices to go down amid rebounding supply, the source added.

There are four operational gas liquefaction plants with a combined daily capacity of 2.38mcm in Sichuan.